Are your friends narrow minded? You might qualify for the Million Dollar Round Table and hold multiple securities licenses and certifications, but your friends think of you as an insurance agent. “She sells life insurance. I don’t need any right now.” Are your friends fully aware of the many ways life insurance can help them solve problems?
Here’s a look at how whole life insurance can help a client solve nine problems in search of a solution.
You were probably taught them on your first day in the business.
Unfortunately, your friends and prospects didn’t attend that class, so you need to share the information. Life insurance comes in all varieties. We are talking about plain vanilla, whole life.
Provide for Loved Ones: It’s the basic need everyone thinks about. You have a young family. You are the major breadwinner. Something happens to you. How is your family supposed to make ends meet? It’s a form of protection. Peace of mind.
Key Man Insurance: You and your partner own a business. It’s grown. Many employees depend on you. If something happens to your partner, it’s likely their spouse or family will inherit their share of the business. Cash would be a lot more useful to them. Life insurance on both partners can provide the cash to buy out heirs and keep the business intact.
Emergency Loans: Hopefully your client lives a long life. The whole life policy accumulates cash value, eventually growing to the full face value, or beyond. Many policies allow you to borrow money against the cash value. You would pay interest.
Funding Estate Taxes: Your client owns a farm. It’s your major asset. It’s illiquid unless you sell of acreage. Your goal is to keep the farm intact, passing it to the next generation. A life insurance policy, while considered part of your estate, can produce cash needed to pay estate taxes instead of selling land.
Cash Value: If times get tough, you need cash and you’ve run out of options, a whole life policy that has built cash value is an asset. You can turn it in and receive cash, if necessary.
Value as Collateral: Your client needs to put up collateral for a loan. The lender wants financial instruments. In many cases, you can put up the policy and its cash value as collateral. You continue making payments on the policy. The lender collects the death benefit if you die. The client is motivated to pay back the loan quickly.
Charitable Giving: You want to do something special for your religious institution or school. You might name them as a beneficiary on your life insurance policy. You might give them the policy as a donation now, taking any tax deduction in accordance with the law.
Meeting Obligations: You are up there in years. You have grandchildren and great grandchildren. You have promised you will take care of their college education expenses, but that’s a long way off. Consider naming an adult custodian and under the rules of the Uniform Transfers to Minors Act. When the client passes away, the life insurance proceeds are held for the child’s benefit.
Special Needs Child: It’s a huge responsibility. You love them dearly. You can care for them during your lifetime, but what happens when you pass away? This will take money. You will likely be setting up a Special Needs Trust to hold those funds. Consider naming the trust as your life insurance beneficiary.
Clients and prospects might consider life insurance as a traditional product designed for a very narrowly defined need. Let them know it can help with many other problems.